U.S. shale companies bought insurance in case oil and gas prices wobbled. They didn’t prepare for this.
That’s why some on Wall Street believe these companies will soon cry “uncle.”
As 2015 nears its end, the argument goes, shale firms will exhaust the price “hedges” that have protected them thus far. Between that, and all the other financial stresses, they may finally be forced to cut oil output and pave the way to a price recovery.
U.S. exploration and production firms (E&Ps) have hedged 21.2 percent of their oil output this year, according to RBC Capital Markets. For next year, they’ve so far hedged only 10.1 percent of output.